Opendoor Technologies (NASDAQ:OPEN) provides services of buying and selling properties. Additionally, it also offers insurance, maintenance, and warranties. The company offers one-stop solution for real estate. In fact, it is all about iBuying and is making the most of the untapped market. OPEN stock has shown volatility recently and has lost more than 20% of its value since January.
OPEN stock was trading at $10 in June 2020, it hit an all-time high of $39 in Feb 2021 and is currently changing hands at $21. The company is looking to expand its market share in 2021.
The stock has dipped a little over the last month. The current dip is a strong opportunity to add it to your portfolio. Let’s take a look at its two key drivers.
Massive Market Opportunity
The first driver behind the growth of OPEN stock is the massive market size. The company is about iBuying and it aims to change the way people sell their homes. They make an instant cash offer for houses and carry out repairs before they sell the houses at a profit. The company has managed to make a profit from each house it sells and even if it is somewhere around $5,000 per house, it can lead to a huge amount.
Opendoor technologies has the right system in place and they have the ability to scale, but there should be demand for their services. The company has already gained a strong market share and it needs to continue doing the same. The real estate industry is massive and it is only going to grow in the coming years.
There are specific neighborhoods that have a high demand for houses. If the company manages to make the right moves, it will be able to benefit from the market potential. Opendoor Technologies has a unique approach toward the real estate industry. And, if it manages to make even a few thousand per home, it could hit new revenue highs and take OPEN stock higher.
I discussed the unique business model of the company in January. I am still bullish on the stock because of its ability to scale and execute the iBuying model successfully. More specifically, the company has managed to prove its strength in the financial results. Investors are concerned about the fundamentals of a company and this is where Opendoor stands strong.
The company generated revenue of $2.58 billion in 2020 and sold 9,913 homes throughout the year. The sales declined 50% due to the pandemic, but the revenue is impressive. It managed to reduce the losses in 2020 and reported a loss of $286.6 million. The average gross profit generated per home stood at $22,173. It expects Q1 2021 revenue between $600 million and $625 million.
With the vaccine rollout and the economy reopening, I strongly believe that the company has the potential to meet the revenue target. It is expected that the sales and revenue will pick up pace in the second half of 2021.
I am not the only one bullish on OPEN stock. Recently, Cathie Wood’s Ark Invest ETFs bought 633,400 shares. This is not the first time that OPEN stock was added to their portfolio.
Further, City Analyst Nicholas Jones had a buy rating with a price target of $34. The analyst cited that the company is offering home solutions that provide additional control on the transaction process that is usually stressful.
Out of five Opendoor analysts on Tipranks, four have a “buy” rating and one has a “hold” rating with an average price target of $36.50. That’s about 63% upside from the current price.
The Bottom Line on OPEN Stock
The demand for iBuying services is only going to increase over the years. It makes the process of selling your home quick and convenient. I believe the company will report strong Q1 results and the stock will hit $30 soon.
Considering everything, the current dip in OPEN stock is a good opportunity to add to your portfolio. The company reports Q1 results on May 11. The pandemic may have bogged down the company but the future looks bright.
On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article.